Amid Record Low Rates, Mortgage Application Activity Falters

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For the week ending September 25, 2020, the Mortgage Bankers Association’s latest Weekly Application Survey showed a decrease in application activity, both in purchasing and refinancing, as its Market Composite Index decreased by 4.8% from the previous week on a seasonally adjusted basis. Its constituent indexes, the Purchasing and Refinancing indexes, decreased from the previous week by 1.9% and 6.5%, respectively. The downward movements came despite the MBA’s tracked 30-year fixed rate mortgage rate sliding by six basis points to 3.05%, a new record low in the series. The MBA cites operational challenges being faced by lenders even while working at full capacity, limiting the number of applications they can process.

While the year-over-year changes in Purchasing and Refinancing were positive in the latest week, 22% 52%, respectively, they were significantly lower than the year-over-year gains in the previous week. This is consistent with MBA’s observation that the release of pent-up demand from earlier in the year is waning. Still, there is activity in higher-price tiers of mortgages, with the average loan balance reaching close to a survey high.

The refinance share of mortgage activity decreased to 63.3 percent of total applications from 64.3 percent the previous week. The adjustable-rate mortgage (ARM) share of activity remained unchanged at 2.2 percent of total applications.



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